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The Search for Value: Cross-border Bank M&A in Emerging Markets


  • Jonathan Williams

    () (Business School, Bangor University, College Road, Bangor, Gwynedd LL57 2DG, UK.)

  • Angel Liao

    () (The Management School, University of Edinburgh, 50 George Square, Edinburgh EH8 9JY, UK.)


Between 1998 and 2005, we identify 73 cross-border bank mergers and acquisitions (M&A) transactions in which international banks acquired ownership stakes in 46 listed banks in emerging market economies (EME). A total of $797.5 billion of bank assets was acquired for $37.5 billion in Latin America, Central and Eastern Europe, and Asia. Using event study methods, we establish (1) whether the announcement of cross-border M&A transactions generates value for bank shareholders; and (2) whether M&A characteristics and/or economic and institutional features explain returns to bank shareholders in EME from cross-border investments. Consistent with US and European evidence, cross-border M&A creates value or significant abnormal returns for target bank shareholders. Yet, returns to shareholders at acquiring banks often exhibit value destruction; cross-border M&A activity in banking is not found to facilitate wealth redistribution from EME to industrialised countries. A regression analysis confirms the importance of the institutional and economic environment, as well as target bank profitability and the method through which international banks acquire ownership stakes, as significant determinants of abnormal returns. Comparative Economic Studies (2008) 50, 274–296. doi:10.1057/ces.2008.2

Suggested Citation

  • Jonathan Williams & Angel Liao, 2008. "The Search for Value: Cross-border Bank M&A in Emerging Markets," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 50(2), pages 274-296, June.
  • Handle: RePEc:pal:compes:v:50:y:2008:i:2:p:274-296

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    Cited by:

    1. Tigran Poghosyan & Jakob de Haan, 2008. "Determinants of Cross-Border Bank Acquisitions in Transition Economies: A Latent Class Analysis," CESifo Working Paper Series 2372, CESifo Group Munich.
    2. repec:eee:ememar:v:32:y:2017:i:c:p:190-199 is not listed on IDEAS
    3. Tigran Poghosyan & Jakob de Haan, 2010. "Determinants of cross-border bank acquisitions in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(4), pages 671-696, October.
    4. Lebedev, Sergey & Peng, Mike W. & Xie, En & Stevens, Charles E., 2015. "Mergers and acquisitions in and out of emerging economies," Journal of World Business, Elsevier, vol. 50(4), pages 651-662.

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